Sales of outboard motors used in fishing vessels are subject to 5% GST: AAR
The Kerala Authority for Advance Ruling (AAR) recently clarified that the Sale of Yamaha Out Board Motors (OBMs) for use in fishing vessels attracts 5% concessional Goods and Services Tax (GST) instead of 28% normal GST.
The applicant, M/s George Maijo Industries Private Limited imports and supplies Yamaha Out Board Motors and related parts to their various customers in India. Imports are channelized through their offices located in the State of Tamil Nadu.
The applicant submitted that Yamaha Out Board Motors and their accessories are sold mainly to Fishermen, Boat Builders, Defence departments, and other agencies. The OBMs procured by the applicant fall under the Harmonized System of Nomenclature (HSN) Code 8407 21 00.
The applicant requested an advance ruling regarding the classification and the rate applicable for sales of OBMsto fishermen and other Government agencies and other purposes including sales done through dealers, authorized service centers, and boat builders.
Fishing vessels, factory ships, and other vessels for processing or preserving fishery products fall under Customs Tariff Heading 8902 and are liable to GST at the rate of 5%. The Outboard motors imported by the applicant are classified under Customs Tariff Heading 8407 21 00 – Outboard motors – Marine Propulsion engines – Spark-ignition reciprocating or rotary internal combustion piston engines and attract GST at the rate of 28%.
It was observed by the Authority comprising Joint Commissioner of Central Tax Sreeparvathy S L and Additional Commissioner of State Tax Abraham Renn S that, parts of goods of headings 8901,8902, 8904, 8905, 8906, 8907 falling under any chapter of the Customs Tariff attracts GST at the rate of 5%.
Thus, it was ruled that “The Out Board Motors and its spare parts supplied for use in vessels
falling under Customs Tariff Heading 8902 shall attract GST at the rate of 5% [2.5% – CGST + 2.5% SGST]” and that, “If it is supplied for use other than as parts of goods of headings 8901, 8902, 8904, 8905, 8906 and 8907 as stated above, GST at the rate applicable under the respective Customs Tariff Headings in which they are classified will apply”.